In the book of stories of Germanic/Norse myths I have somewhere, the dwarves are quite magical and are always doing things like changing themselves into fish in order to swim away, etc.I surmise that maybe these 'magical abilities' were put into the story by the story teller in order to explain to the reader why they didn't see dwarves everywhere.Perhaps we see "selective fantasy evolution" at work. The D&D world dwarves either didn't have the magical ability to hide (and thus had to learn to interact with the humans) or had better relations with the humans and thus didn't have to learn to dissapear.